According to a report by The Block, the Avalanche Foundation has reached an agreement to repurchase nearly 2 million AVAX tokens previously sold to the Terra ecosystem development organization Luna Foundation Guard (LFG), pending approval from the bankruptcy court.
In April 2022, LFG, responsible for ensuring the price stability of TerraUSD (UST), purchased $100 million worth of AVAX to bolster its reserves when UST was the fourth-largest stablecoin. However, the collapse of the Terra ecosystem in May 2022 left the future of the AVAX tokens held by LFG uncertain.
Now, the Avalanche Foundation has announced that it has negotiated an agreement to repurchase these 1.97 million tokens from the bankruptcy estate of Terra developer Terraform Labs. The Avalanche Foundation stated on X: "This move ensures that LFG will not violate the restrictions on token usage in the original agreement and protects the tokens from the complexities of liquidation by the bankruptcy trustee."
The Avalanche Foundation did not disclose the financial terms of the transaction in the announcement. Based on the price at the time of writing, the 1.97 million AVAX is valued at approximately $57 million, a 43% decrease compared to the original value at which LFG acquired them.
According to the announcement, the agreement will take effect after approval from the bankruptcy court handling Terraform Labs' estate. After Terraform Labs reached a settlement with the U.S. Securities and Exchange Commission (SEC) in June, the bankruptcy court judge approved the company's decision to cease operations in September.
With the release of the above announcement and the growing popularity of the new battle royale shooter game "Off The Grid," the price of AVAX has risen over 13% in the past four days, reaching around $29. The in-game economy of Off The Grid is built on the Avalanche subnet.
Ava Labs co-founder Kevin Sekniqi stated on X last Sunday: "Avalanche has focused on achieving horizontal scaling (application chains, etc.) over the past few years and seems poised to dominate this area soon. However, there is still much work to be done in vertical scaling, which is the next issue that must be addressed, and I believe larger hardware must be a key part of that."